This documentation clarifies the facts surrounding the President's
approach to health care reform.

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ANALYSIS OF THE NEW REPUBLIC ARTICLE

ARTICLE: "The bill guarantees you a package of medical
services but you can't have them unless they are
deemed `necessary and appropriate.'"

FACT: This is very misleading. Today, insurers can decide that
procedures, treatments, etc., are inappropriate or unnecessary. No
insurance plan guarantees you the right to unnecessary or inappropriate
care. To imply that such decisions are made only by doctors and
individuals today is deliberately misleading, at best. Under reform,
most such decisions will be made by patients and their doctors. In
fact, the Health Security Act gives consumers more guidance and more
rights about what is necessary and appropriate.

In addition, the Act does not, as the statement implies, forbid a plan
from delivering services -- even if it does consider them not necessary
or inappropriate. It says they may do so. And under the Act you have
clear means of immediate appeal should you feel you deserve different
or additional care -- a guarantee that rarely exists today.

Most importantly, the bill (page 15-16) specifically states that
"Nothing in this Act shall be construed as prohibiting the following:
(1) An individual from purchasing any health care services." There is
nothing in the Act to prohibit any individual from going to any doctor
and paying, with their own funds, for any service. There are also no
restrictions on the purchase of supplemental insurance.

ARTICLE: "That decision (whether or not care is necessary or
appropriate) will be made by the government, not by
you or your doctor."

FACT: Untrue. If anything, the "necessary and appropriate" care
provision in the bill delegates authority to the medical profession --
rather than imposing further government bureaucracy between the
patient and the doctor. For most people today, their insurance
company, not their doctor, has final authority over what is necessary,
appropriate and therefore reimbursable. Today, insurers can decide
that procedures, treatments, etc., are inappropriate or unnecessary.
No insurance plan guarantees you the right to unnecessary or
inappropriate care.

Michael Kinsley criticized this article, saying: "It is
pointless to compare the Clinton plan with some idealized version of the
classic American system, in which you can go to any doctor you want, who
can perform any treatment he wants, order any test she wants, prescribe
any drug he wants, and charge whatever she wants, all paid for by
insurance." ["Health Care Nonsense", The Washington Post, 1/27/94]

Under reform, most such decisions will be made by patients and
their doctors. The National Board has the authority to issue guidelines
relating to what is necessary and appropriate. The authority to issue
these guidelines does not infer that there are no options left to
physicians and patients, only that a benefits package guaranteed to all
Americans must be consistently defined across states.

Guidelines that are developed by the Board will be developed in
an open hearings process in which all interested parties can have input.
Regulations used by insurance companies today are developed by the
companies as those companies see fit.

ARTICLE: "Escaping the system and paying out-of-pocket to see
a specialist for the tests and treatment you think
you need will be almost impossible."

FACT: That is wrong. Under the Act, you can pay "out-of- pocket" for
anything you want at any time, to any physician or hospital willing to
treat you.

However, we should stress that, under reform, it is very
unlikely that individuals will have to pay for such treatment. Every
plan, even the most structured HMO, must offer at the very least a
point-of-service option which enables you to go see a physician of your
choice at any time. In some plans you may have to pay somewhat more to
do this, but it is always an option, unlike today and unlike the
alternative plan (Cooper) endorsed by The New Republic.

ARTICLE: "If you walk into a doctor's office and ask for
treatment for an illness you must show proof that
you are enrolled in one of the health plans offered
by the government. The doctor can be paid only by
the plan, not by you."

FACT: False. You do not have to be enrolled in a plan to be treated.
If you go to a doctor and are not enrolled in a plan, the doctor will
treat you. You will then be given information on available plans and
you may choose any plan you want. The plan you choose then pays the
physician. The purpose of this provision is to assist all individuals
in enrolling in a plan.

However, as noted above, an individual may pay any doctor any
price for any service outside the comprehensive package of services
offered as part of a plan. So if an individual wants to go to a doctor
and pay the doctor they can.

ARTICLE: "The bill requires the doctor to report your visit
to a national data bank containing the medical
histories of all Americans."

FACT: Not true. The very first provision of this section of the Act
states: "The information system must be consistent with privacy
security standards in the Act." Physicians may be required to submit
data on outcomes, treatments, etc. for the purpose of improving
quality and assessing treatments and outcomes. But the Act very
specifically prevents against tying this data to specific individuals.

Sections 5101 and 5102 spell out detailed protections that
assure that patient records and individual health data are strictly
protected. Therefore, the implication that an individual's medical
records will be in a national data bank and that those records can be
accessed by all kinds of other agencies, individuals, etc., is patently
untrue.

ARTICLE: If you work for a company with fewer than 5000
workers you "must enroll in one of the limited
number of health plans offered by the regional
alliance where you live."

FACT: Misleading. These individuals choose a health plan from the
regional alliance bargaining on their behalf. But it is clearly
misleading to assume there will be a "limited" number of plans offered
by the alliances. In contrast, the alliance is obliged to offer all
plans certified by the state, including at least one traditional
"fee-for-service" plan. The only exception is that an alliance may
decide not to offer a plan than charges 120% or more of the average
premium cost in the region.

For example, one of the real world models of an alliance -- the
California Public Employees Retirement System -- offers its members a
choice of 24 different plans and individuals choose a personal physician
in the plan. And more than two-thirds of the members are so satisfied
with their plan that they would recommend it to a friend. This is a big
difference from today's system in which the great majority of Americans
face a very limited choice of health plans. About 50% of Americans
insured through their employer have only one or two options of health
plans. The great majority of Americans will have more choice in the
alliance system.

ARTICLE: "Under the bill, a National Health Board . . . will
decide how much the nation can spend on health care
beginning in 1996."

FACT: This is untrue. The Health Security Act makes no attempt to
"decide how much the nation can spend on health care" and specifically
rejected the idea of global budgets or arbitrary price controls. The
National Board is only authorized to set the initial premium targets --
the rates at which health insurance premiums (for the comprehensive
benefits package) not national health expenditures may increase from
year to year. These premium targets are important guarantee to
American taxpayers and businesses who are being asked to contribute to
their health care that their premiums will not continue to spiral out
of control, as they have done for years. There are no restrictions in
the Act on the amount of money that may be spent by people with their
own funds for additional services or supplemental insurance policies.

ARTICLE: "The bill outlaws plans that would cause a region to
exceed its budget or that cost 20 percent more than
the average plan."

FACT: Wrong again. No plan is "outlawed." The premium limit does
not preclude any plan from participating. The alliance has the option
(not the requirement) to refuse to contract with a plan charging more
than 20% over the average premium (so that people have a safeguard
against insurance company price inflation).

ARTICLE: "Even the bill's authors anticipate that restricting
the dollars available for health care in the teeth
of these trends will produce grave shortages; the
bill provides that when medical needs outpace the
budget and premium money runs low, state governments
and insurers must make `automatic, mandatory,
nondiscretionary' reductions in payments to doctors
nurses and hospitals to assure that expenditures
will not exceed budget."

FACT: This is misleading. The author here is clearly implying that
such a mechanism exists in the main proposal -- it does not. The
section the author is quoting from here refers to states that choose to
form single payer systems, not from the description of the primary
system advocated in the plan. Virtually all single payer systems work
in this manner, adjusting payments to providers to make certain
budgets are met.

Even with regard to single payer systems, there is absolutely no
indication in the plan that the bill's authors are anticipating "grave
shortages." This is responsible legislation; the plan merely spells
out, in this special case, the mechanism by which a single payer system
would meet targets if expenditures were running ahead of anticipated
costs. To spell out such a mechanism is hardly an admission that "grave
shortages" are expected.

ARTICLE: "Above a threshold level of quality, alliance
officials will approve health plans based on lowest
cost, not highest quality."

FACT: Not true. In contrast, the alliance is obliged to offer all
plans certified by the state, including at least one traditional
"fee-for-service" plan. The only exception is that an alliance may
decide not to offer a plan than charges 120% or more of the average
premium cost in the region. They are not required to do this however.

ARTICLE: "What most of us call fee-for-service (choose your
own doctor) will be difficult to buy."

FACT: That is wrong. To the contrary, the Health Security Act
preserves fee-for-service arrangements by requiring all alliances to
offer at least one fee- for-service plan. Today, more and more
Americans cannot choose a fee for service plan because their employers
have chosen not to offer that option. Recent reports have shown that
". . . a growing number of employers have abandoned traditional
indemnity [fee-for-service] plans entirely. In fact, more employers
now offer managed care plans than offer traditional indemnity plans."
In fact, in 1988 , 89% of employers offered fee-for-service plans but,
by 1993, this number had dropped to 65%. ["1992 Health Care Benefits
Survey", Foster Higgins, 1992; "Health Benefits in 1993", KPMG Peat
Marwick]

ARTICLE: "Price controls on doctors' fees and other
regulations will push doctors.."

FACT: That is wrong. There are no price controls in the President's
plan. Price controls -- calling for government micro-management of
every health care service, doctor's fee, drug technology, and product
-- were considered and specifically rejected. The Health Security Act
does have -- as a backup mechanism for cost control -- a limit on how
much insurance premiums can increase every year. This is an important
guarantee. If employers are to be told they have the responsibility to
contribute to coverage -- and if the federal government is going to
provide discounts to small businesses and low- income individuals --
then American businesses and families deserve the guarantee that their
premiums, and government spending, won't continue to rise unchecked.

Since, the federal government won't make market decisions on
specific prices; health plans will have to decide themselves how to
become more efficient in a way that won't drive consumers to another
plan. As Stephen Zuckerman and Jack Hadley, two leading health policy
analysts, wrote in support of the plan's premium limits, "it seems far
preferable that insurance companies that are responsible to their
subscribers make these decisions than having the federal government
involved in detailed price negotiations and review procedures with
individual hospitals and physicians." ["Clinton's Cost Controls Can
Work", Washington Post, 11/7/93]

ARTICLE: "The bill limits what health plans can pay
physicians and prohibits patients from paying their
doctors directly."

FACT: False. Any health plan that pays physicians according to their
own contracts may pay those physicians anything they like. The bill
only tells most health plans what to pay physicians with whom it has
no contract. These fees apply to fee-for- service plans and for charges
when individuals go out of the plans' network of doctors.

It is not clear why a patient would want to pay a doctor
"directly," for services that their insurance company is obligated to
pay. If the implication is that individuals cannot go to any doctor and
pay for whatever they want, that is false. Their right to do so is
expressly protected.

ARTICLE: "The Clinton bill calls utilization review a
`reasonable restriction' on patient care and
expressly includes it as a requirement for doctors
treating patients with fee for service insurance as
well."

FACT: That is wrong. The plan does not "require" fee for service
insurers to use utilization review. It says they may do so. The
purpose is to define what fee for service insurers -- who have no
contracts with the physicians they are paying -- may do in assessing
charges. Utilization review is one option they are expressly
permitted, not required, to do.

In reality, the bill is just following common practice here,
acknowledging the typical practice of utilization review in fee for
service plans. If the author is implying that many Americans are
enrolled in plans where there is no review by the insurer, she is being
deliberately misleading. As Michael Kinsley said, "It so happens that
the New Republic's own health care plan (of which I am a member) has
extensive `utilization review.' . . . Utilization review is one of the
developments rapidly spreading - - for good or ill -- under our current
health care system. It is one reason health cost inflation has abated
so dramatically . . ." ["Health Care Nonsense", The Washington Post,
1/27/94]

ARTICLE: "Some states recently have enacted laws to safeguard
choices patients want to make for themselves, such
as which hospital or pharmacy to use. HMOs protest
that these laws hobble cost containment, and the
Clinton administration apparently agrees. The
Clinton bill pre-empts state laws protecting patient
choice."

FACT: Deliberately inaccurate. The Act guarantees all individuals
full choice by giving everyone the option many don't have today --
access to a fee for service plan in which they can choose any provider.
The Act also mandates that all HMO's and other managed care plans offer
a point-of-service option in which individuals have a right to see any
doctor outside of their plan or its network. This, again, is far
greater choice than many individuals have today. In fact, current
trends are towards declining numbers of individuals in fee for service
plans and therefore fewer choice of doctors.

Most of the relevant laws that are being "pre- empted" are not
geared to protecting patient choice -- which is fully protected and
expanded in the Act -- but to protect providers from price competition
and other pressures of managed care organizations. The state laws the
Act overrides are those that bar managed care organizations from
creating their own networks -- for example, not allowing a managed care
network to refuse to admit a qualified physician into its network.

ARTICLE: "Doctors in training will be assigned to the coveted
specialty programs based partially on race and
ethnicity...."

FACT: This is ridiculous. No physician or medical student is
"assigned" to any specialty or told what type of medicine they can
practice. The Act does make clear that funding of medical education
will put more emphasis on the widely-acknowledged need to train
primary, as opposed to specialty care physicians, and that attention
will be paid to the potential under-representation of minority groups.

ARTICLE: "Under the Clinton bill you are entitled to a
package of basic benefits, but you can have them
only when the are `medically necessary' and
`appropriate.' That decision will be made by the
National Quality Management Council, not be you or
your doctor. The Council ... will establish
`practice guidelines' to control `utilization' of
health services."

FACT: That is wrong. You and your doctor will decide the type of
care that you need. The National Board has the authority to issue
guidelines on what may be necessary or appropriate. Its process of
issuing any guidelines will entail the fullest participation of all
concerned.

Today, virtually all insurance plans can refuse to pay for
services deemed unnecessary and inappropriate, and it is the insurance
company -- not the patient and physician -- with the ultimate authority.
The decision- making process of insurers are not subject to any public
input or scrutiny. To imply that the new system will have restrictions
on what is necessary and appropriate, when the current system does not,
is anything but truthful.

There is nothing in the Act to suggest that the "practice
guidelines" referred to here will be mandatory or will control anything.
They are to assist plans, providers and others in providing higher
quality care. As the Act says, they "may be used by health care
providers to assist in determining how diseases, disorders, and other
health conditions can most effectively and appropriately by prevented,
diagnosed, treated and managed clinically."

ARTICLE: "The Secretary of Health and Human Services has the
power to set a controlled price for every new drug,
and to require the drug manufacturer to pay a rebate
to the federal government . . . If a producer balks
at paying the rebate, the Secretary can `blacklist'
the drug, striking it from the list of medications
eligible for Medicare reimbursement."

FACT: Very misleading. The word "blacklist," with quotation marks
around it in the statement, does not appear in the bill. Putting
quotation marks around it implies it is directly lifted from the text.
In this case, however, it obviously applies to the author's
interpretation of the text.

The Secretary can, in some circumstances, request a rebate on a
drug as a cost containment tool. This will apply only to those drugs
purchased in bulk by the federal government for the millions of Medicare
beneficiaries. Manufacturers are given process rights in these
negotiations as well. There is no "blacklist".

ARTICLE: "Under the bill, the Secretary weighs the
development costs and profit margin for the single
new drug, rather than the overall profitability of
investing in new cures."

FACT: The statement refers to page 373 of the bill. The bottom of
that page and the next page list no less than 8 factors that must be
considered by the Secretary in negotiating a rebate in the Medicare
drug program. Clearly, there is no effort to exclude the consideration
that many efforts to produce new drugs cost a great deal and produce no
profit to drug manufacturers. Drug companies would certainly be given
the opportunity to raise these considerations and there is absolutely
nothing in the proposal would prevent the Secretary from considering
that reality.